Somewhere among the thousands of nurses and their dependents at the Allina health system, one person's serious health problem is generating an unusually large set of bills for the group.

In July, the Minnesota Nurses Association issued a notice to union members about a "high-cost claimant" who had generated an estimated $4 million in medical bills through the first week of April.

By year's end, the dollar value of the insurance claim could get even bigger - as much as $8 million, according to a copy of the notice obtained by the Pioneer Press.

As a result of the financial hit, union leaders warned that health insurance premiums for 2012 would need to grow by 20 percent to 40 percent unless members voted to institute a cap on annual per-person expenses for next year.

Multimillion-dollar claims in a year aren't common, insurance experts say, but the situation provides a window into the growing problem of how groups pay for medical care when an individual's bills exceed $1 million. The rules for how employer groups and insurers can handle the risk of these big claims are changing with last year's federal legislation to overhaul the nation's health care system.

"We definitely are seeing claims in excess of seven figures grow, and the industry likewise is seeing the growth," said Alden Skar, vice president and managing actuary for a Minneapolis-based division of Reinsurance Group of America. "Medical inflation has a lot to do with it. Technological changes have a lot to do with it.

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I think heroic medicine is coming into play, to some extent."

The Minnesota Nurses Association represents workers at nine Allina facilities across the region, including United Hospital in St. Paul and Abbott Northwestern Hospital in Minneapolis.

The July notice indicates that the union group previously had to address the issue of a high-cost claimant in 2007. At that point, the group implemented a cap on the dollar value of health plan benefits that an individual could use over a lifetime.

Such caps have been common in employee health plans for many years but were eliminated as part of the federal Patient Protection and Affordable Care Act, which Congress passed last year. By 2014, the federal law will also eliminate caps on the value of health benefits that a person can use in a given year - another kind of cap that has been common.

The forthcoming change with annual caps was referenced in the July union notice.

"The annual maximums are a temporary measure due to federal changes to the law, and will be lifted in 2014," the notice states. "So, (Minnesota Nurses Association) representatives will need to continue working with the Allina Corporation on how to address the issue."

Officials with Allina and the Minnesota Nurses Association would not discuss details about the case, including whether nurses have voted to impose the $2 million cap on benefits. The July notice states that by installing the temporary cap, premium increases for 2012 would be limited to between 8 percent and 10 percent.

"Allina has agreed to bear the cost of the potentially 8 million dollar claim for 2011," the notice stated, "but if the annual maximums are not implemented, the MNA Health Plans will bear the cost for 2012."

Between 2008 and 2010, the history of high-cost claimants in the MNA Health Plans included four cases where bills ranged from $508,180 to nearly $2 million, the notice stated.

The diagnoses that could lead to million-dollar claims are likely serious events that result in complications, such as infection or organ failure, said Skar of Reinsurance Group of America. His company often sees these cases because it sells what's called "reinsurance" coverage for employers and health insurers that are the primary source of insurance.

The most common large claim that Skar's company sees is related to extremely premature births or congenital anomalies, he said. Another common cause is an organ transplant that is rejected by the recipient's immune system and requires intensive medical treatment and retransplantation to save the patient.

Clotting factor medications for people with hemophilia can easily reach into the seven-figure range, Skar said. And some claims grow significantly, he said, because of the presence of "co-morbidities" - treating a heart condition in a patient, for example, who also suffers from cancer and diabetes.

"One of the risk-management options available would be stop-loss insurance or excess reinsurance," Skar said, referring to policies that limit a group's financial exposure to large medical claims.

It's difficult to say exactly how many million-dollar claims are out there, Skar said, though he estimated the frequency has grown significantly over the past eight years.

That's not surprising to Stephen Parente, a health-policy expert at the University of Minnesota. One contributing factor, Parente said, is the growing number of expensive medications that are "custom brewed" for patients.

Without annual or lifetime caps on benefits, groups must purchase reinsurance to handle the rare chance of seeing a million-dollar claim, Parente said. Most large groups already have such coverage, he added, but the price of those policies jumps when someone in the health insurance group incurs millions in care costs.

"They have to pay for more expensive reinsurance to stay in the market of providing insurance," Parente said. "This is going to shift the math in favor of them being more willing to leave the market" and not provide coverage to workers, he added.

When cases involving high-dollar claimants come along, health plans typically share general information about the situation with employers, said Eileen Smith of the Minnesota Council of Health Plans, a trade group for local insurers.

The discussion often centers on what's driving the claim, Smith said, and whether it is expected to be a one-time expense or ongoing. Costs in the case of a motorcycle accident might be limited to a year whereas costs for a condition like hemophilia might stretch over several years.

Insurers offer case-management programs and "treatment decision support," Smith said, to make sure patients with such expensive problems are getting the right care at the right time. The goal is not explicitly to save money, she said, though insurers hope that improved care will bring savings at some point.

While instituting a $2 million cap on annual benefits limits the financial risk for the group, it doesn't necessarily mean that someone who generates $4 million in medical bills will be forced to cover the difference, Smith said.

People in Minnesota who hit caps can seek coverage from a nonprofit group called the Minnesota Comprehensive Health Association (MCHA). It offers individual health insurance to state residents who have run out of coverage or can't find it in the private marketplace.

Created by the Minnesota Legislature in 1976, MCHA currently provides coverage for about 27,000 residents. But the downside for individuals covered through so-called "high-risk pools" such as MCHA is that premium and other out-of-pocket costs can make the policies unaffordable, said Eboni Morris, public policy manager with the Hemophilia Federation of America.

Hemophilia is a rare bleeding disorder in which the blood doesn't clot normally, and patients with the condition have been among the loudest supporters of the Affordable Care Act provisions that eliminate lifetime and annual caps on benefits.

For a small subset of hemophilia patients who require a particular clotting factor medication to control bleeding in an emergency, there definitely have been cases that generate $5 million per year in medical bills, said Kimberly Haugstad, the group's executive director.

"The constant stress on a family - worrying every month if they're going to hit their cap, and monitoring if they're going to hit their cap - adds a tremendous burden," Haugstad said. "Every person in the country is a diagnosis or a car accident away form being in the same situation financially as a person with hemophilia."

Last month, when President Barack Obama visited Cannon Falls, Minn., on a three-day bus tour to discuss the rural economy, he got a personal "thank you" for the health care law from Aaron Reeves, the city's administrator. Reeves' son has hemophilia, so his family had a personal stake in seeing caps eliminated.

Part of the problem for hemophilia patients, Reeves said, is a simple issue of numbers. Clotting factor medications are very expensive to develop and produce, yet there aren't many patients to spread those costs across.

"There's nothing that these kids or adults did to bring this on - they didn't overeat; they didn't drink; they didn't smoke," Reeves said. "This is a genetic issue they're having to deal with. Yes, it's expensive, but what's the alternative?"

Patients with hemophilia aren't alone, said Art Caplan, a bioethicist at the University of Pennsylvania. People with rare genetic disorders such as Gaucher's disease and Fabry disease also are at risk of incurring huge medical bills, Caplan said.

In general, the federal overhaul of the health system should help in these cases because "health reform spreads risk of these very high-cost patients over a broader pool," Caplan wrote in an email.

It's always been the case that in any given year a tiny number of people account for the vast majority of health care spending, said Karen Pollitz, senior fellow with the Kaiser Family Foundation.

Caps have allowed employer groups to limit exactly how much of these costs they must shoulder, so eliminating caps makes it more expensive to continue providing insurance. But Pollitz said she doubted an employer like Allina would stop providing employee health insurance solely as a result of the caps issue.

"One way or another, we find a way to collectively finance our health care expenses," Pollitz said. "Whether it's policy-holders and premiums or a public program with citizens paying taxes, we're still looking for a way to collectively finance these very expensive health events because we have to - no one can save up that kind of money."